Wayne O'Leary

A Green Mountain Alternative

The more things change, the more they remain the same. Thats a hoary, old saying, but in the case of American health insurance, it remains as current as todays headlines. In the wake of the March 2010 passage of the Patient Protection and Affordable Care Act (Obamacare), medical premium costs, the Achilles heel of health reform, have not declined; they have, in fact, increased.

A few specifics: Nationwide, premiums for employer-based coverage rose 9% last year, far faster than wages or overall inflation. In selective regions of the country, sticker shock has been more palpable. For example, the San Francisco Bay Guardian reported in February that many customers of Blue Shield of California would face a 15% rate increase on March 1, which the California Healthcare Foundation indicated was grimly in line with the Golden States annual rise in premiums over the past decade.

The reputable Kaiser Family Foundation agrees that Obamacare has thus far had a limited affect on premiums, leaving it to employers, in our employer-based system, to keep healthcare costs down; it adds (tongue-in-cheek, no doubt) that they have never been very successful at this, nor have private health insurance companies. Unsurprisingly, the routine response from employers has been the introduction of high-deductible or limited-benefit plans; companies of under 200 employees now have 50% of their workers in such plans compared to 16% in 2006.

Insurance companies, for their part, have felt no particular pressure to respond to public dissatisfaction. They operate in what Washington Post investigators characterized in 2009 as highly concentrated (or oligopolistic) markets controlled up to 40% by single insurers. The American Medical Association itself released data that year showing that one insurer dominated over half the market in 16 states and a third of it in 38 states. We can only assume things have subsequently worsened, in light of accelerating corporate mergers  over 400 involving health insurers since the mid-1990s.

Perhaps this explains why states as diverse as California and Vermont have begun exploring the single-payer option, replacing premium-funded private insurance with tax-supported government insurance and, simultaneously, trading the administrative complexity and expense of multiple payers for the simplicity and low overhead of an individual payer.

Nowhere has the process gained more momentum than in the Green Mountain State of Vermont. On May 26, 2011, Vermonts Democratic Gov. Peter Shumlin signed legislation passed by Democratic statehouse majorities (with virtually no Republican support), bringing Americas first single-payer law into existence; he thereby broke the first symbolic link in the unified chain of our for-profit system of marketplace medicine.

Nevertheless, it remains no more than a partial victory, because unless Obamacare goes down at the hands of the US Supreme Court, an executive waiver excusing Vermont from certain requirements of the new federal law must be secured before implementation can take place. Even then, the waiver cannot be granted until 2017 without Congress, controlled by Republicans, agreeing to a legislative amendment that moves the waiver date up to 2014, as requested by Vermonts congressional delegation.

According to health-policy spokespersons in the Washington office of Sen. Patrick Leahy (D-Vt.), interviewed April 11, accelerated-waiver bills are presently sitting in committee, with no immediate action pending and none likely until after the 2012 election. This is problematic in that failure to gain an advanced waiver pushes the effective starting date for a single-payer experiment out five years and into another administration, perhaps one less favorably disposed to encourage liberal innovation by granting exceptions. Conversely, if Obamacare is declared unconstitutional, Vermont can still proceed, albeit without the health-exchange funding for its plan a waiver would provide, but, as Leahy staffers emphasize, the road is longer.

For his part, Gov. Shumlin insists his state will move ahead regardless of whether it is denied subsidies through invalidation of the entire Obama law by the Roberts Court. Others in the Green Mountain State disagree, but Shumlin, fully invested and committed, argues that his health plan can, because of its innate economies, survive without federal support. From Vermonts standpoint, the optimum legal outcome might be invalidation of just the federal individual mandate, which would eliminate the need for waivers and free the state to create its own plan immediately, while preserving the likelihood of some federal assistance in the form of tax credits to cover the uninsured.

A more immediate threat to the Vermont single-payer is the nationwide health-insurance industry flourishing unimpeded in the other 49 states. This $300 billion interest, which currently has a quasi-monopoly in Vermont consisting of three companies (Blue Cross/Blue Shield, MVP, and Cigna), needs the states experiment to fail; its working hard behind the scenes to guarantee that outcome, as reform advocate Wendell Potter reported earlier this year at HuffingtonPost.com. Vermont progressives, however, may have out-maneuvered the opposition.

Green Mountain Care, the single-payer plan adopted last year, will be phased in gradually, and several key elements remain to be resolved by a gubernatorial advisory board. The legislation leaves open the questions of provider reimbursement rates, co-pays, and deductibles, as well as the mode of financing  whether through a payroll tax shared by employers and employees (like Social Security) or through general taxation. It also effectively weakens the fervor of insurance-industry opponents by offering an alluring potential enticement: the possibility that rather than being publicly run, the final version could be a public-private hybrid in which private insurers would bid competitively to administer the public program on behalf of the state.

Regardless of the fine print, this much is clear: Vermont, in the form of a legislative markup of less than 100 pages, has decreed that all of its citizens will have their essential healthcare needs and drug expenses met, that all 47,000 uninsured Vermonters will henceforth have medical benefits, that fee-for-service will be phased out and global budgeting phased in, and that profit making and private insurance will be essentially removed from the system.

The ball is now in the Supreme Courts palsied hands. It can make Vermonts task harder or easier, but even the preening and posturing of its ideologically rigid majority cant stop progress in the long run.